Balancing risk management and efficient legal delivery
LOD’s most recent global survey indicates that in-house legal teams are increasingly facing the twin challenges of managing risk and prioritising volumes of work. This is a tricky balance and requires a commercial mindset, clear processes and applied technology, writes James Kenney.
In LOD’s upcoming global survey report (due September), we reveal that the top strategic challenge facing in-house legal leaders around the world is managing risk. This was closely followed by the other major challenge of prioritising and managing large volumes of work. These twin challenges are interwoven as risk tends to rise in line with work levels and can even skyrocket if critical work is unreviewed by the legal department.
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The great balancing act
The tension between getting through the workloads in-house teams find on their desks, and controlling risk, is difficult to navigate. Astute general counsel are meeting these challenges by ensuring their team’s service delivery is fit for purpose, not gold-plated. It’s a well-worn adage, but it’s worth repeating that the perfect is the enemy of the good. And while risk can be managed and mitigated — it can never be eliminated.
We’ve been helping in-house teams manage risk for well over a decade, and more recently, our SYKE business has been helping in-house teams scale their risk management capability through the application of smart processes and legal technology. So, what does scaling these capabilities look like for legal teams?
Managing risk through contracts
How legal departments control the contracts portfolio across their organisation is an area ripe for both efficiency gains and better risk control. This is because a typical contract portfolio is both full of risk and capable of being digitally transformed. In-house counsel will be familiar with the risks that can emanate from mismanaged contracts: missing obligations, litigation exposure and failure to meet key commercial renewals — to name just a few.
This isn’t even to mention contracts they never find their way to legal (who else has heard a business manager say, “oh, that wasn’t an important contract, so I didn’t share it…”)! Having a pragmatic, user-friendly and intelligent technology solution to manage your contracts will help ensure you have visibility across your risks and will also help your team to reduce those risks.
The more sophisticated end of contract management is where you’re empowering the business to self-serve certain contracts. By giving them approved templates (with accompanying guidance on acceptable risk parameters) combined with intuitive technology, legal departments can boost their organisation’s speed of business and remove some of the lower-end, more routine work.
SYKE recently worked with a leading financial institution across Asia to roll out the automation of forty different agreements and deployed an advanced matter management system. Combined with a change management strategy and a clear plan, SYKE enabled the client to confidently walk the business through the process changes and immediately see dividends in contract speed.
Prioritising the right work is fundamental to a high-performing legal team. Importance must not relentlessly give way to urgency, and you can’t let your team fall into the trap of responsiveness. But how do you decide what matters are important and what to prioritise? After all, risk is subjective unless it’s documented and agreed upon. We saw that highly valued teams have “legal advice protocols” or “charters”, which are formal documents that outline the priorities and service levels of the legal team.
These are essentially process documents that tell the business what takes priority and the service level you can expect. These documents are a vital part of the legal triage process and set up your team to ensure that the important (and risky) work is prioritised appropriately. Further, this also helps your team to be viewed as more strategic and proactive, rather than simply the “department of reading and writing”.
Without clear guidance and support, legal teams are more likely to apply inconsistent (and riskier) approaches to legal matters. So, what are the support structures in place for your team? For many departments, the best guardrails come in the form of knowledge management and precedents. Spending resources on a precedent hygiene review is something that has scalable benefits.
If you harmonise and simplify your precedents, you’re concurrently reducing the challenge of workload and setting your risk to levels that have been agreed upon and signed off — not decided on the fly. The LOD and SYKE team recently worked with a leading global bank to redesign their knowledge management sites and also implement templates to assist with the automation of processes. This was managed end-to-end by our team and helped the client to harmonise workflow between over 1,500 legal professionals.
There’s no doubt that the tension between controlling risk and getting through your workload is a difficult one. It’s something that requires both a business and legal mindset. Through pragmatic contract management and clear matter processes, legal departments can reduce both their risk profile and their workload.
James Kenney is the director of legal operations and tech, Asia Pacific, at LOD and SYKE.